TMI Blog2016 (9) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is calculated. Whereas in none of the other categories of the dealers opting for payment of tax on lumpsum basis, the taxable turnover is calculated. One of the important component on taxation being missing namely taxable turnover in the case of dealers opting for payment of tax on lump sum basis, levy of additional tax under Section 7A of the VAT Act cannot be sustained. Levy of additional tax and interest withheld - petition disposed off - decided in favor of petitioner. - VATAP No. 59 of 2014 (O&M) - - - Dated:- 8-9-2016 - MR. RAJESH BINDAL AND MR. HARINDER SINGH SIDHU, JJ. For The Appellant : Mr. Sandeep Goyal, Advocate For The Respondent : Ms. Mamta Singla Talwar, DAG Haryana RAJESH BINDAL,J. 1. This order will dispose of VAT Appeal No. 59 of 2014, CWP Nos. 8436 and 14681 of 2014. Facts of VAT Appeal No. 59 of 2014: 2. The assessee is in appeal before this Court impugning the order passed by the Haryana Tax Tribunal (for short 'the Tribunal'), upholding levy of surcharge on the amount of lump sum tax paid by the appellant on the works contract. The appellant in the present case is a dealer registered under the Haryana Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Excise and Taxation Commissioner (Appeal) Rohtak, who vide order dated 22.1.2013 dismissed the same by passing a totally non-speaking order. Still aggrieved, the appellant preferred appeal before the Tribunal, which was dismissed vide order dated 8.10.2013. It is the aforesaid order of the Tribunal which has been impugned before this Court raising the substantial questions of law as have been referred to above. 8. Learned counsel for the appellant argued that Section 3 of the VAT Act which is the charging section provides for incidence of tax. The tax is to be calculated on the taxable turnover determined in terms of the provisions of Section 6 of the VAT Act at the rates of tax provided for in Section 7 of the VAT Act. Section 9 of the VAT Act provides for payment of lump sum in lieu of tax payable under the Act by way of composition. Section 7A of the VAT Act provides for levy of additional tax. A plain reading of Section 7A of the VAT Act shows that it provides for levy of additional tax in the nature of surcharge on the taxable turnover of a dealer calculated at the rate of 5% of the tax payable by him. Reference was made to Rule 46 of the Haryana Value Added Tax Rules, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surcharge, is to be calculated on the tax payable under the VAT Act. It has not been levied or to be calculated on the taxable turnover, as is sought to be argued by counsel for the appellant. She further argued that the provision starts with a non-obstante clause, meaning thereby, it overrides all other provisions of the VAT Act, hence, has to be given its true meaning. The exception has been carved out in the section is only for retailers, who opted for payment of lump-sum tax. Section 9 of the VAT Act, which provides for payment of lump-sum tax on composition in lieu of the tax payable under the VAT Act in fact takes care of the tax generally levied on the regular dealers which is the tax payable under Section 3 of the VAT Act. The surcharge levied under Section 7A of the VAT Act is over and above. 12. The judgment of Hon'ble the Supreme Court in Bhima Jewellery's case (supra) was distinguished referring to the provisions under consideration there. In that case, additional tax was leviable with reference to tax, which was payable under specific sections. It did not include the section under which lump-sum tax was payable. She referred to a Division Bench judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sy, are extracted below: ''7A. Levy of Additional Tax:- 1. Notwithstanding anything contained in this Act, there shall be levied and collected on the taxable turnover of a dealer registered under this Act, other than a retailer in lump-sum composition with the department, an additional tax, in the nature of surcharge, which shall be calculated at the rate of five percent of the tax, payable by him: Provided that the aggregate of tax and the surcharge payable under this Act, shall not exceed in respect of the goods, declared to be of special importance in inter-State trade or commerce under Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the rate fixed under Section 15 of that Act. 2. Except as otherwise provided in sub-section (1), the provisions of this Act shall, so far as may be, apply in relation to the additional tax leviable under sub-section (1), as they apply in relation to the tax leviable under any other provision of this Act. 9. Payment of lump sum in lieu of tax (1) The State Government may, in the public interest and in subject to such conditions as it may deem fit, accept from any class of dealers, in lieu of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acity of Kiln Category Lump sum tax payable in lieu of tax for the period 1-10-2005 to (30-9-2009) 1 Brick kiln of capacity of more than 33 number of Ghori +A ₹ 2,68,800/- plus ₹ 9,360/- per additional ghori above 33 ghories 2 Brick-kiln of capacity of 28 to 33 number of Ghori A Rs.2,68,800/- 3 Brick kiln of capacity of 22 to 27 number of Ghori B ₹ 2,10,000/- 4 Brick kiln of capacity of below 22 number of Ghori C Rs.1,68,000/- 5 Brick Kiln not fired during the year ending 30th September, 2010, in which stock in and outside the kiln as on Ist October, 2009 last, did not exceed five lakh bricks of all categories D Rs.42,000/- xx xx xx xx (4) A brick kiln owner liable to pay lump sum shall not be authorised to make purchase of goods at lower rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to him, containing the following particulars:- (1) Name of the applicant contractor; (2) TIN; (Append application for registration, if not registered or not applied for registration); (3) Name of the contractee; (4) Date of award of the contract; (5) Place of execution of the contract; (6) Total cost of the contract; (7) Period of execution, and appending therewith a copy of the contract or such part thereof as relates to total cost and payments. (2) The application shall be signed by a person authorised to make an application for registration. On receipt of the application, the assessing authority shall, after satisfying itself that the contents of the application are correct, allow the same. (3) The lump sum contractor shall be liable to make payment of lump sum quarterly calculated at four per cent of the payments received or receivable by him during the quarter for execution of the contract. The payment of lump sum so calculated shall be made within thirty days following the close of the quarter after deducting therefrom the amount paid by the contractee on behalf of the contractor under section 24 for that quarter. The treasury receipt in pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C for making purchase of goods at lower rate of tax or Central Sales Tax, as the case may be, for use in manufacturing of goods for sale. He shall not be required to make use of declaration(s) in Form VAT-D3 for carrying goods. He shall be required to furnish quarterly returns in Form VAT-R11 within a month of the close of the quarter. xx xx xx xx 52. Lumpsum scheme in respect of retailers xx xx xx xx (2) Subject to other provisions of this rule, a retailer, in whose case aggregate of purchases of taxable goods made, and value of goods received for sale, by him during the last year does not exceed (forty lakh rupees), may, at any time, opt for payment of lump sum, calculated in accordance with the provisions of sub-rule (4), by making an application in Form A given below and a retailer who makes an application for registration may also exercise such option by making an application in Form B given below simultaneously: PROVIDED that a retailer who deals in aerated water/drinks or medicines shall not be eligible to opt for payment of lump sum. xx xx xx xx (4) The retailer whose application has been allowed (hereinafter referred to as the 'lump sum retailer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and filing of returns. A dealer, who may have opted for payment of lump sum tax, can opt out by making an application to that effect. 19. Rules 47 of the Rules provides for payment of lump sum tax by brick kiln owners by way of composition. The rate of tax prescribed has relation with the capacity of the kiln. He is required to file his annual return on Form VAT-R8. There are other restrictions also. Similarly Rule 48 of the Rules, prescribes for payment of lump sum tax in respect of lottery dealers. The rates have been prescribed with reference to types of lotteries such as, weekly, monthly, festival or instant lottery and the rates prescribed are per draw. In this case return is to be filed on statutory form VAT-R9. 20. Rule 49 of the Rules deals with lump sum payment of tax by the contractors. The tax is to be calculated at the rate of 4% of the total valuable consideration receivable for the execution of works contract, which may include even the component of labour. The returns are to be filed on statutory form VAT-R6. In Rule 51 of the Rules, lump sum tax payable by Ply Board Manufacturers has been specified. The calculation is as per size of press installed in the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able event; (ii) taxable person; (iii) rate of tax and (iv) measure or value for which rate of tax is to be applied. In the absence of any of the components, the levy may be struck down. The relevant paragraph thereof is extracted below: 6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness ill the legislative scheme defining any of those components of the levy will be fatal to its validity. 25. The same view was expressed by Hon'ble the Supreme Court in 2015(1) SCC 1, Commissioner of Income Tax Versus Vatika Township Private Ltd . 26. On interpretation of a statute, Hon'ble the Supreme Court in Mathuram Agraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 7A of the VAT Act is on taxable turnover, is also evident from the fact that the retailers opting for payment of lump sum tax have been excluded from the levy. As provided for in Rule 52 of the Rules, in the case of retailers, taxable turnover is determined only then the amount of tax is calculated. Whereas in none of the other categories of the dealers opting for payment of tax on lumpsum basis, the taxable turnover is calculated. Unless in the case of a dealer taxable turnover is determined, the provision will not have application. As has already been noticed above in the case of Brick kiln owners, the amount of lump sum tax is related with the capacity of brick kiln. In the case of lump sum tax on lotteries, it has relation with type of lottery with reference to draw. In respect of contractors, the amount is calculated on the total valuable consideration receivable for the execution of the contract on the transfer of property with no reference to the sale of taxable goods only specifically. In a case of Ply Board manufacturers, the amount specified has relation with the size and number of the press installed in the factory. 30. One of the important component on taxation be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount computed under section 7-C is not an amount which is determined as tax on the taxable turnover, but is determined with reference to the total value of the works contract in respect of which option is exercised. As already noticed there is no provision in the Act which deems such a total contract value as total turnover. 17. Turnover, as defined in the Act, is the aggregate of value of sales effected or purchase effected by the dealer. The works contract not only involves the transfer of goods but also involves the rendering of several services which cannot be subjected to tax under the Sales Tax Act. The consent given by the dealer under section 7-C for the levy of percentage of total contract value towards the tax otherwise payable under section 3-B cannot be stretched to include the payment of additional sales tax under any other enactment by treating the contract value as taxable turnover for the payment of tax under the Additional Sales Tax Act. 32. Amendment was carried out in Section 7C of the 1959 Act providing for payment of lump-sum tax by the works contractors defining the term 'taxable turnover' for the purpose of works contract. It was defined t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Hence, proportionate change in the compounded rates was held to be not permissible. The judgment has no application in the facts of the case. 35. Division Bench judgment of this court in Hoshiarpur Large and Medium Industries Association's case (supra), is not applicable in the case in hand as the issue involved therein was regarding vires of Section 30-AA added in Punjab General Sales Tax Act, 1948 providing for levy of surcharge even on the dealers availing exemption from payment of tax. Surcharge otherwise was leviable under Section 5(1)(C ) of 1948 Act. Vires thereof was upheld. The contention raised by learned counsel for the petitioner therein that it should be adjusted against the exemption limit was also rejected. 36. In the case in hand as referred to earlier, the incidence of tax under Section 3 of the VAT Act is on the taxable turnover. Section 6 of the VAT Act provides for calculation of taxable turnover. Rates of taxes have been provided for under Section 7 of the VAT Act. This is the normal procedure applicable in the cases of all the dealers, where for levy and collection of taxes, taxable turnover is determined and then tax is calculated at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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